bethn1188

Can I be sued for using my suitable housing contigency?

bethn1188
8 days ago

So my husband and I decided to sell our house and move to the country. We used the same agent we used 3 years prior to buy our current house. I wanted to make offers contigent on selling our current home (which is what we did last time) but she insisted that we needed to sell our house contigent on finding suitable housing or our offers would never get accepted in this sellers' market.
So I did what she said and accepted an offer and signed a purchase agreement with the suitable housing contigency written in.
It has now been over a month, we have made multiple offers and none have been accepted. The market has slowed considerably and we are ready to forget the whole thing and stay where we are.
But now she is pressuring us to go through with closing anyway and rent back from the buyers. I asked several times before we listed if we could back out if we didn't find anything and she always said 'yes'.
There is no way we can risk the buyers kicking us out after a couple months rent. We have two kids, a large dog, five cats and six birds. No rental would take us.
Since we wrote the suitable housing contigency into the contract and did all this under her advice, will we face any ramifications for backing out?

Comments (17)

  • PRO
    JudyG Designs
    8 days ago

    Unless I am reading this incorrectly: "she insisted that we needed to sell our house contingent on finding suitable housing”, contingent meaning dependent on….you have not found a suitable house, so realtor doesn’t make the sale.

  • honibaker
    7 days ago

    You can be sued, but you will win.

    The exact same thing happened to me in 2001. I made 6 or 7 offers to purchase that were not accepted (hot market, I did not underbid), and agent convinced me to put my house on the market, and just add that contingency if I got a good offer.

    I got a good offer, I accepted with the contingency that I had an accepted offer (to purchase another home for myself) in the next few weeks. I made 3 more offers, none were accepted.

    In the meantime, my purchasers had paid for an inspection. They got their lawyer to write me a threatening letter that if I did not pay for their inspection, they would sue. I refused. Once their lawyer found out I had made 3 full-price purchase offers,, and none were accepted, he backed off. They went away quietly.

    I took my house off the market. This situation is too stressful for the seller and the buyer!

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  • kevin9408
    7 days ago

    Of course they can sue you. They could win but what what would they get? Did they spend anything in the process until you backed out of the deal? I'd sue you, to me "suitable housing" is open to debate and would be decided by an arbitrator or judge and could be considered a rental and you didn't try. I'd be pissed and want every nickel back I invested plus court fees, and any othe expenses, for example selling their house and having to move into a rental. I'd also sue for emotional damages of some kind and if my lawyer thought I had a good case I'd sue to force you to sell me your house plus lawyer fees.

    But it's not me and only an example of how deep it could go. You can sue anyone for anything in America, doesn't mean you'll win, The "suitable housing" clause is open for interpterion as I see it and your relator is an idiot. Pay the people for any expenses like the appraisal fee and inspection fees and be done with it. It's not up to you anymore, it's up to the buyer and an arbitrator (small claims) or judge (big money case).

  • bethn1188
    Original Author
    7 days ago

    We also made offers over asking price. One was $18k over (which is a lot for a small town in Ohio). She told me they didn't accept it because we had to make the offer contigent on closing on our current house. So what good does it do to have our house under contract if it doesn't get you ahead on bids? We're also conventional which should also be better.

    I guess kevin9408 missed the part about having so many pets and that's why we can't rent. Didn't even try? Just for reference, I checked for rentals and they all had a no pet policy.

    Also, why didn't the buyers' realtor advise them against getting the inspection and so on until we got another house under contract?

    It seems to me that the realtors are the problem in this situation. I did what I was advised to do.

  • jlhug
    7 days ago

    I suspect that if you read your contract, the inspection had to be done within a limited number of days after the offer was accepted. Your buyers had to get that out of the way before they could proceed with the sale.


    I can see someone asking in court about why you didn't board your pets.


    In my area, the accepted offers are the ones with zero contingencies. Our market is crazy.


    I'm not an attorney. I think you need to ask one before you act on the clause. The internet isn't a great place to get legal, medical or tax advice.

  • ericalynn523
    7 days ago

    To me, it sounds like your realtor just wants to get her sale.

  • bry911
    7 days ago

    If you want to be upstanding and ensure you don't get sued, offer to reimburse the buyers for their costs. I would argue that is the most ethical thing anyway.

    Without reading your actual contingency it is difficult to offer any meaningful input. However, don't take someone else's attorney backing down as proof you will win.

    Generally speaking, these exist to prevent homelessness. Courts in different states have interpreted them in different ways. In some states offering a rentback would be sufficient to fully satisfy the clause, while in other states these are viewed as full-on sales option contracts and the seller can cancel at will. In some states buyers have been awarded their fees back and in others they haven't.

    Again, if it were me, I would offer to cover some or all of the buyer's expenses in such a way that it is clearly a settlement. That will prevent them from further action if they accept the settlement.

  • Toronto Veterinarian
    7 days ago

    "But now she is pressuring us to go through with closing anyway"

    Because it's to her benefit, not to yours, unless there's some extenuating circumstances we don't know about.


    "Since we wrote the suitable housing contigency into the contract and did all this under her advice, will we face any ramifications for backing out?"

    Probably, but it depends on the specifics of that part of the contract. As is appropriate, I think, if you took the word of a sales professional instead of a lawyer, to tell you your legal rights.

  • homechef59
    7 days ago

    "Suitable housing" is like "suitable financing". The beauty is in the eye of the beholder. If you had finding suitable housing as a condition of sale, the definition of suitable is your definition. To use the suitable financing as an example. I could apply for a loan at 0% interest and be approved. But, the loan terms are not suitable to me. Therefore, I can decline to buy the house because I can't find suitable to me financing.

    In my view, you can cancel the contract with no ramifications. You don't need to accommodate the buyer. You have screwed him over, but what you are doing is legal according to your mutually agreed to contract. They assumed this risk when they signed the contract.

    You can't find suitable housing and you have made a diligent effort by placing offers on multiple homes. You have looked into the rental market and there is nothing suitable available for a family with multiple animals. You have done your part to comply with the terms of the purchase offer contract.

    While you may choose to pay the rejected buyer's out of pocket costs, you are under no obligation to do so. If you do reimburse them, make them sign a release from further legal action as a condition of payment for their costs.

    Your realtor knew the risks and correctly advised you to insert the suitable housing clause in the the contract. They understood the current market conditions. That clause will need to be exercised and the realtor will lose a sale and commission. That's part of the business and they understand it. Too bad for everyone involved.

  • bry911
    7 days ago
    last modified: 6 days ago

    The beauty is in the eye of the beholder. If you had finding suitable housing as a condition of sale, the definition of suitable is your definition. To use the suitable financing as an example. I could apply for a loan at 0% interest and be approved. But, the loan terms are not suitable to me. Therefore, I can decline to buy the house because I can't find suitable to me financing.

    I think you are mischaracterizing contract contingencies.

    The buyer can't trigger a financing contingency. The only contingency that a buyer can trigger is a right to cancel the agreement clause in the contract. All other contingencies must be cancelled by a function of the condition they protect against. One of the reasons that financing contingencies always include a down payment and a rate is that without those explicit statements you move to the reasonableness test. Contracts generally can't be interpreted in unreasonable ways. This prevents you from using contingency clauses as an excuse to cancel agreements that you couldn't cancel otherwise.

    If your contract says only "suitable financing" the courts will interpret suitable to be acceptable to a reasonable person in your circumstances. So a court might look at a 0% interest loan with a five year payback as unsuitable because of the high payments, but they are unlikely to accept a 30 year 0% interest loan as unsuitable just because you want your payments on the 15th and the bank says you have to pay on the 10th.

    -----

    Likewise, the seller can't trigger a suitable housing contingency. It has to be triggered by a function of there not actually being attainable suitable housing. Which means, there is no housing available and/or attainable that a reasonable person in your situation would find acceptable. This is generally far more subjective and courts give far more leeway but you still can't have unreasonable demands in your housing requirement unless they were written into the clause.

    For example, suppose I want a house which faces magnetic North to within 1 degree. That is something I could write into a suitable housing contingency, but unless I wrote it in, I could not use it to trigger a suitable housing contingency clause. That is an unreasonable constraint and would be seen as bad faith.

    ----

    Having said that, one of the problems with real estate transactions is that you have to have actual damages and actual damages beyond fees are difficult to prove in real estate transactions. Typically buyers just find another house and because of the unique nature of homes it is difficult to prove financial damages of buying one house compared to another.

    So most real estate contract issues are just settled by the fact that they are not worth pursuing. Even unreasonably vague terms are typically not worth pursuing.

  • homechef59
    6 days ago
    last modified: 6 days ago

    byr911, You made my point. The point of writing a vague condition is to give as much leeway for interpretation as possible. My attorney advised me years ago to place a suitable financing clause as an addendum and strike through the boilerplate specific interest rate language. If the counterparty is willing to accept such a clause, then it's on them. Most don't read what they sign.

    The seller's representative, the realtor, realized that finding a home in this market would be difficult or unlikely. She was proven correct and protected her seller from this circumstance with that vague suitable housing contingency.

    The seller has exceeded a good faith effort to find a suitable home by placing multiple reasonable and unsuccessful offers and even sought rental property to no avail. The seller has exceed any reasonable conditions of the contingency and is free to exercise it.


    One other point for the OP. Yes, you can be sued. Anyone can be sued for anything. Collecting from you would be another matter. I doubt they would win anything or pursue it to a judgment.

  • kevin9408
    6 days ago

    Well I looked up selling a house with a "suitable housing" contingency and noticed a lot of the same things posted here. Like what constitutes suitable housing and how the buyer risks losing anything spent if the deal fall through. I couldn't find where anyone was sued over it but a few mentioned reimbursing the buyer for there losses.

    What they did say was "suitable housing" is to vague and the contingency should of had conditions attached such as a time window, say 30 days for example and the buyer doesn't request and pay for an inspection or appraisal until after the 30 days. If the seller backed out the deal before the 30 days fine, but if not the sale must go through no matter what. I also saw rent back as some mentioned along with extensions.

    So bottom line the buyer's realtor did a horrible job representing them and was totally incompetent as I often see. I sold a duplex around 2005 fully occupied and told the realtor I'm not removing the tenants. I even gave him a letter stating the same. At closing I presented the rent deposits and leases and the buyer was shocked! He thought the duplex would be empty and was ready to move in. I looked at both realtors and asked "you didn't tell him?" Both had this cocky little simile and remained silent. We closed the deal and the realtors started laughing it up running there mouths while this guy sat there with no place to live. I couldn't take it, and at the table I unloaded both barrels on them in effect to how pathetic, shameful and incompetent they were and looked right into my realtor's eyes and told him what a POS he was.

  • bry911
    6 days ago
    last modified: 6 days ago

    @homechef59 - The point of writing a vague condition is to give as much leeway for interpretation as possible. My attorney advised me years ago to place a suitable financing clause as an addendum and strike through the boilerplate specific interest rate language. If the counterparty is willing to accept such a clause, then it's on them. Most don't read what they sign.

    I strongly recommend a second opinion! In U.S. law there is something known a Contra Proferentem. If you strike through specific language in order to add vague language to the contract the court is unlikely to decide in your favor. It is a bit beyond the pale that any attorney would even suggest otherwise, as there is a mountain of precedent for that. In fact, I suspect that it is the most upheld precedent in contract law.

    I agree the courts are not going to make the OP settle for a house they don't like. They may, however, deem the search was insufficient to be a good faith effort.

    --------

    Moreover, this entire assertion is a bit misplaced. The point of specific language in a contract is to keep you out of court, and not to help you win the court case once you get sued. There is no doubt that suitable housing is a vague condition.

    In my opinion, the OP would be well served to throw three or four hundred bucks at the buyers just to ensure they will not pursue any further action. If there is even a small chance of the buyers pursuing this the settlement is well worth the money spent.

  • bethn1188
    Original Author
    6 days ago

    Thanks for all the answers. My husband and I had already considered paying for the inspection for them because we do feel badly that it didn't work out. We really did want to move but we were completely unaware that there was a housing shortage and that it would be so difficult to secure a new house. Also when we started looking the prices were higher but still reasonable. In a few weeks they skyrocketed. Not to mention having to bid $20k over that!

  • amanda99999
    6 days ago

    Nothing useful to add, but unless you have kids in school I'd sell if I got a good offer and rent near where I wanted to live. Because life's short. (But I'm old and kids/school/work commute isn't a factor - so YMMV!)

  • function_first
    6 days ago
    last modified: 6 days ago

    I also agree with Amanda. You'd be a much more attractive buyer when and if the perfect place comes on to the market if you're renting and your place is already sold. It's fairly easy to find a place to rent that will let you terminate the lease under those circumstances, for a fee (the one we had was 1.5 our monthly rent).

  • mxk3 z5b_MI
    6 days ago
    last modified: 6 days ago

    If the housing market is hot in your area, I'd buy first then list for sale -- it is a seller's market to an extreme degree in many areas of the country. Why spend money to rent and deal with the headache of moving twice when you can pretty much hang a sign on a shack and it will sell {{scratching head}}

    Frankly, I'm surprised a buyer even agreed to this with the state of things as they are now. With buyers losing out on countless homes, I'd want a sure thing (well, as sure a thing as possible...) -- only way I'd consider such a deal was if there was some sort of "out" for me as a buyer so I could walk away if I found something else with no contingencies. (say, like "sale contingent on buyer not closing on a suitable single-family home" --> which is pretty much giving as good as you're getting in this sort of contingency).